Global Optimization. Dusseldorf Global Client Meeting

Transcription

1 Global Optimization Dusseldorf Global Client Meeting

2 Discussion Points Challenges of Operating Internationally Key Project Objectives Additional Benefits Customized Deliverables Defined Process Supporting Technology Sample Output Client Examples Fachtagung AGS S. Cargill 1

3 Challenges of Operating Globally Global expansion presents opportunities for growth, as well as new exposure to loss Evolving regulatory environment requires ongoing review to manage compliance risk and ensure program compliance Geographically and culturally diverse operations require specialized global risk strategies Global operations create data collection challenges which can impede effective risk management Complete global solutions are often undermined by product and market limitations Limited resources and decentralized management structures stretch risk management departments Conflicting retention strategies between corporate and operations Fachtagung AGS S. Cargill 2

4 Aon Global Optimization Our dedicated process can help bring global and local insurance programs into alignment with overall corporate objectives, and provide a leaner more effective risk management program which is in full compliance and cost effective. Key Project Objectives: Thoroughly analyze risk using consistent and centrally managed metrics Identify and eliminate gaps in coverage Optimize insurance purchasing strategy Auditable review for regulatory compliance Ensure consistent procedures for claims reporting and settlement Ensure consistent standards for loss prevention and risk control Ensure a coordinated and consistent engagement delivery to all local operations Benchmark provided against industry groups, peer organization and Global 250 companies Fachtagung AGS S. Cargill 3

5 Additional Project Benefits Sharing of data amongst operations (optional) Recommend specific strategy to optimize insurer relationships Provide consultation to company Insurance Risk Management team to standardize best practices to local operations Review available strategic Risk Finance options, including captive expansion and utilization Fachtagung AGS S. Cargill 4

6 Customized Deliverables Global Optimization can have many different applications, depending on the direction and position of your organization. Aon can customize the project to meet the specific needs of your Risk Management operation to help identify certain areas of information; Has your company grown through acquisition, and need a review of local policies to ensure compliance and consistent coverage? Are local operations purchasing individual policies, and need a review corporate coverages versus local coverages? Does Risk Management oversee Employee Benefits, and should these programs be included in the Global Optimization review? Does your company want to perform an overall Risk Mapping exercise to review against the current insurance purchases? Is your company considering a revised retention strategy, and needs better data on losses retained losses around the world? Fachtagung AGS S. Cargill 5

7 The Process Phase I Logistics (2 weeks) Identification of Executive Sponsor from client Identification of project leaders from client and from Aon network offices in each country Finalize timeline, project milestones and escalation process Agree and finalize scope of project (include benefits, etc) Update of client structure in Aon Technology Platform (GAMS and Aonline) Internal client global communication introducing project is drafted, reviewed and delivered to key project stakeholders. Aon Risk Solutions Discussion Document 6

8 The Process (cont d.) Phase II Discovery (4-6 weeks) Introductory meetings/conference calls are held Initial data is provided to the Aon network, including; policies, binders, loss control reports, claims history, schedule of locations, exposure data, etc. GAMS and the project toolkit is populated, with real-time access via Aonline Aon Risk Solutions Discussion Document 7

9 The Process (cont d.) Phase III Local Review (4-6 weeks) Materials are consolidated and senior level meetings are scheduled with project leaders and key stakeholders to review and validate findings GAMS and project toolkit updated with new data, as needed Data is reviewed for coverage, terms, retention strategy, and regulatory compliance The local Aon teams develop recommendations on a per country basis Aon Risk Solutions Discussion Document 8

10 The Process (cont d.) Phase IV Global Review (4-6 weeks) Individual country reports are delivered and consolidated by the Aon project leader. Aon prepares our findings, including 1. Country summary to include overview of operations, summary of insurance purchases and key findings 2. Product summary to include consolidated view of key insurance programs, benchmarking against peer companies, identification of duplicate purchases, potential gaps in cover, and suggested restructuring (if advantageous) for either global or regional programs. 3. Diagnostic on overall risk transfer strategy, to include; Market Security, Coverage Terms, Program Structures, Insurance Costs, Retentions, Limits, and Account Services 4. Risk mapping of critical exposures on global basis 5. Engage in Risk Finance Decision Platform (RFDP) to assist with setting proper global risk retention strategy 6. Captive usage recommendations and future utilization 7. Insurer summary, to analyze premium spend by classification and territory Aon Risk Solutions Discussion Document 9

11 The Process (cont d.) Phase V Implementation (ongoing) Option I Recommendations are developed and shared on central basis only. Decisions are made from corporate perspective, and with entire view of project results Option II Recommendations are developed and shared on a local basis, with key decisions made quickly (i.e., compliance, gaps in cover and duplicate purchases) Both Options All recommendations are categorized to outline short-term or long-term timeframes Potential savings are identified At times, recommendations lead to additional spend in order to fill in gap or fulfill regulatory requirement Tracking document created to outline specific tasks, deliverables, timelines, and savings Aon Risk Solutions Discussion Document 10

12 Supporting Technology Proprietary technology coupled with institutionalized processes and accountability guarantee complete and accurate information on your global program. Global Account Management System (GAMS) and Aonline Policy, premium and tax information shared in real-time allows you to manage your program at the touch of a button. Aon experts utilize the data to identify innovative solutions to maximize the value of your risk management program. Fachtagung AGS S. Cargill 11

13 Sample Output SAVINGS POTENTIAL Saving amounts are in USD Total savings potential: USD 264,387 Argentina 163,431 13,773 Car fleet 2% Brazil 27,737 Marine Program 2% 82,317 Chile 4,380 4,135 GL Program 31% Financial Lines 4% PD Program 61% Savings by country in USD Colombia 96,645 Costa Rica 525 El Salvador 10,638 Mexico 82,847 29,679 Panama 2, Puerto Rico 9,594 PD Program Marine Program Car fleet GL Program Financial Lines Trinidad DIAGNOSE Insurance Costs The heterogeneous structure currently in place allows each market to purchase insurance coverage according to local needs but without considering the broader corporate perspective Coverage costs are expensive and not optimized Deductible Structure Different deductibles apply in the various markets Various level of complexity in each country Deductibles Limits Insurance Costs Pricing Aon s Diagnostic Account Service Limits: Different limits apply in the various markets Various level of complexity in each country Limits in single countries are far below the potential of regional programs Market Security Economic crisis has contributed to downgrades of some insurance companies By using various underwriters the market risk is spread across the entire insurance market Coverage terms / conditions Different terms and conditions apply in the various markets In some countries, affiliates need to declare each shipment to secure coverage Market Security Coverage Terms Structure Structure: Structure should maximize program limit, market security and cost efficiencies Structure should optimize Sun Chemical s risk spend Account Service: Efficient Corporate Risk Management within Sun Chemical is demanding due to the current structure which involves various underwriters, various brokers and local insurance programs. Aon is able to provide Sun Chemical with exceptional quality of service; as a single broker, we would be in a position to focus on results and achieve seamless transition. FINDINGS Current situation Evaluation Recommendations Total costs of 16 local 16 local property policies can property policies is USD be restructured in one 817,155. Rates are different homogeneous regional in each countries and no program with higher limits and homogeneous coverage is broader coverage. Central provided. Claim handling is renewal and claims handling processed locally. No less will reduce time spent by local than 4 brokers and 8 affiliates in dealing with insurance companies are insurance. involved in Latin America. Total costs of local policies is Local marine policies can be USD 21,901. However, we restructured in one miss relevant information for homogeneous regional Brazil, Costa Rica, Mexico, program with higher limits and Panama, Puerto Rico. broader coverage. Central Therefore, we assume that renewal and claims handling this amount is only a small will reduce time spent by local portion of the overall costs of affiliates in dealing with the transit risk. Rates are insurance. Coverage will be different in each countries provided automatically, i.e. and no homogeneous without declaration on a case coverage is provided. Claim by case basis. handling is processed locally. No less than 3 brokers and 5 insurance companies are involved in Latin America. In some countries, affiliates need to declare each shipment to secure coverage. Sun Chemical has a Global Sun Chemical needs to General Liability Program. eliminate double coverage However, it seems that a and include as many number of countries are countries as possible under securing local liability the Global Program. coverage. Some of them may be excluded from the Global Program, others are buying double coverage. Similar to marine and Savings can be achieved by property, there is no regional introducing a regional car program for car fleet fleet program. Central insurance: each country is renewal and claims handling buying coverage locally. will reduce time spent by local affiliates in dealing with insurance. Some local financial lines Due to the strategic policies (fidelity/crime, D&O, importance of these lines, we Workers Comp and EPL) are believe Sun Chemical should purchased in Colombia, El implement a regional Salvador, Trinidad, program. Central renewal Argentina, Chile, Panama. and claims handling will reduce time spent by local affiliates in dealing with insurance. Area of concern Meets industry standardsexceeds industry standards CURRENT SITUATION Total numer of policies: 57 Total premium paid: USD1,122, , , , , , , , , ,000 Argentina Argentina - Auto fleet ,077 41,355 21,769 Crime Brazil 125,728 Brazil 45,210 D&O Chile 8 418,359 Chile 127,969 Liability Colombia Colombia 45,345 Life Personal Accident Number of policies 7 Costa Rica 1 El Salvador Total premium in USD 238, Costa Rica Property 817,155 2,626 Transit El Salvador 21,901 WC/EL 1, ,188 Mexico 7 187,602 Mexico Property 72% Panama Panama 6 Puerto Rico Total premium in USD WC/EL 0% Auto fleet Transit 5% 2% Crime D&O 2% 4% 1 Trinidad 14,793-5,999 Puerto Rico Trinidad 9 Liability 11% Life 4% Personal Accident 0% Fachtagung AGS S. Cargill 12

14 Client Examples Client Situation Global food and beverage company Client wanted to both understand their total insurance spend globally and reduce their total cost of risk for their global operations Many of the client s lines of business were purchased in a decentralized manner by local teams. Client wanted to ensure all programs were aligned with their corporate risk management objectives Aon Approach: Global Optimization Aon partnered across the global network to conduct in-country meetings with client to explain risk management philosophy and understand local service needs Through the use of the advanced GAMS system, Aon was able to store, organize, and provide the client with access to all its local insurance placed worldwide. Aon built on the collection of the local policy placements to conduct the TCOR diagnostic and capture total insurance spend Value Delivered Provided Client with complete understanding of global insurance purchases and service levels. Reduced $2.4M in costs in year 1, with additional savings in subsequent years leading to $18.4M in cumulative savings in first 4 years of engagement. Savings generated by elimination of duplicative insurance, implementation of regional programs and leveraging existing insurer relationships Improved communication and service levels by implementing a new, consistent global process for brokerage service levels 13

15 Client Examples Client Situation A large heavy equipment manufacturer acquired or established JV Operations throughout Asia, but lacked a centralized risk finance program. Due to accelerated growth, many insurance purchases remained in place. Possibly causing confusion on intent of coverage between programs Concern that coverages are not purchased to consistent level Potential of duplicate coverages being purchased, increasing total cost of risk Aon s Approach Based on analysis conducted by the Aon network, the client identified several insurance policies providing similar coverage with various limits and retention strategies. Aon performed a comprehensive review of policy terms to identify gaps in coverage and limits Value Delivered Clear message to senior risk officers and local operations on risk assumption. Certainty on continuity of limits applying globally Certainty of contract terms and conditions purchased across product lines and geographies Eliminated duplicate coverage and reduced overall premium spend 14

16 Benefits of Optimization: Reducing Total Cost of Risk Detecting coverage gaps and eliminating duplicates Maximizing compliance Providing security and coverage Achieving consistency and transparency Collaborative effort is needed. The more the client is engaged, the better the results. Global Optimization is not a hand-off Project. 15

17 Wie Sie uns erreichen Aon Risk Solutions Justin Priestley GM Executive Director Specialty Crisis Management 8 Devonshire Square London EC2M 4PL t: +44 (0) justin.priestley@aon.com.uk Aon Risk Solutions Anne Deiter Specialty Crisis Management Luxemburger Allee Mülheim an der Ruhr t: anne.deiter@aon.de Aon Risk Solutions ist ein Geschäftsbereich der Aon Versicherungsmakler Deutschland GmbH Fachtagung AGS Justin Priestley + Anne Deiter 16